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Trends Impacting Wireline Procurements

The preeminence of cloud computing warrants a “fresh look” at wide-area network design, particularly for enterprises considering wide-area network procurements. Enterprises  have an important network design choice: either (i) maintain the current MPLS-based design with its uniform security policies, substantial traffic backhaul, and site-based defined routing, or (ii) migrate to one

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With Universal Service Fund outlays approximating $9.0 Billion annually, a contribution factor well above 15% and a declining revenue base, the FCC’s Further Notice of Proposed Rulemaking (“Further Notice”) on USF contribution reform elicited unusually candid responses from services providers and other parties in Comments filed in early July.

Overview

Wireless and Wireline carriers expressed

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The FCC’s Further Notice of Proposed Rulemaking proposes significant, substantive reforms to the manner in which Universal Service Fund (“USF”) contributions are assessed.

The FNPRM undoubtedly will elicit a blizzard of comments and counterproposals as interested parties assess and respond to the proposed changes. At this juncture, several comments are warranted:

  1. The FCC deserves credit

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The broad acceptance of Multi-Protocol Label Switching (“MPLS”) service by enterprise customers warrants a “fresh look” in negotiating three important aspects of Wireline services agreements.  The discussion on service provider transitions applies to Wireless services agreements, as well.

1.  Addressing Chronic Service Issues.  The principal benefits of MPLS service are “any-to-any” connectivity, scalability and ease in adding or deleting sites.  Readily available CPE supports voice-over-MPLS.  These benefits are maximized when MPLS is offered by a single carrier, although multi-national firms may maintain region-specific MPLS networks and some large enterprises maintain several MPLS networks (each provided by a different carrier) for redundancy purposes.

A glaring weakness in carriers’ standard services agreements is the failure to address reasonably the risk of chronic service problems in an MPLS environment.  The carriers’ standard (and antiquated) “partial discontinuance” clauses are limited to problems associated with services to a single customer location; potentially relevant for high volume call centers utilizing inbound toll free services, but not an MPLS network.  Even though Service Level Agreements (“SLAs”), such as mean time to repair and site availability are customer-oriented, the metrics remain largely site-specific.

If  MPLS service to priority customer locations (data centers or corporate offices) are subject to chronic outages, the enterprise’s businesses and processes will be impacted severely and adversely.  The standard carrier insurance policy (to be purchased by the customer) of redundant ports, access and routers is not the answer.  The burden should not be shifted to the customer to insure that the carrier delivers the agreed-upon level of service.  In light of the limitations on potential damages demanded by carriers and the risks associated with chronic service issues, a tailored remedy or escalating remedial responses are warranted to more equitably address the risks borne by MPLS customers.


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